The clash between Elon Musk and President Donald Trump isn’t just political theater; it’s a look into how deeply Musk’s empire depends upon the U.S. government, according to a top investor. Ark Invest CEO Cathie Wood says investors are waking up to the extent of this reliance amid the escalating spat.
In a YouTube video on Ark Invest’s channel, Wood looked at the web of federal contracts, regulatory oversight, and political stakes that underpin Musk’s companies — namely: Tesla (TSLA-3.33%), SpaceX, and Neuralink.
“I think the way this is evolving is Elon, Tesla, and investors are beginning to understand more and more just how much the government has control here,” Wood said. “Elon is involved in companies that are depending on the government.”
She noted that SpaceX has $22 billion in government contracts, and regulatory decisions on everything from Tesla’s robotaxis to Neurolink’s FDA approval can make or break Musk’s ventures. Regulation of Tesla’s autonomous vehicles, for example, could accelerate dramatically if federal rules replace a state-by-state patchwork.
So the tension with Trump is a real factor shaping Musk’s business strategy, and as a result, Wood said the Tesla CEO might be “beginning to walk [some threats] back,” such as his threat to mothball the Dragon spacecraft, which brought back stranded astronauts from the International Space Station.
The feud between the Tesla CEO and the president erupted when Musk criticized Trump’s “big, beautiful” domestic policy bill (which includes cuts to electric vehicle subsidies) and started name-calling the bill (“a disgusting abomination”) and alleging that the president was in the Epstein files.
Trump fired back, threatening to pull government contracts — sparking a 14% one-day plunge in Tesla’s stock. The president recently called Musk “the man who lost his mind.”
While the market volatility was sharp, Wood suggested that the clash partly reflects Musk’s strategic move to distance himself from “being associated with one party or the other” and that his recent steps to dial back certain initiatives could signal a recalibration to protect those interests — something that was “partly, not entirely, orchestrated.”
She added, however, that “clearly, there has been some brand damage to Tesla, which [Musk] readily admits.”
Wood said there are bigger ambitions at play here: Both Musk and Trump want to “change the course of history.” But she said the constant infighting is counterproductive — “Trump is not going to be the greatest president ever if he’s bogged down in one fight after another,” she said, and Musk “doesn’t need to get bogged down, either.”
She also highlighted the geopolitical angle: “President Trump is negotiating in a very tough way with China,” and “China is a big part of Tesla’s business, both production and consumption.” The recent news that China reopened rare earth materials exports to Detroit’s Big Three automakers — but not Tesla — shows just how high the stakes are for Musk’s companies.
Despite all the recent volatility, Wood remains optimistic about Tesla’s future. At a conference Monday in Florida, she reiterated her ambitious $2,600 price target for the company’s stock and said it’d the company she’d invest in if she could only invest in one. Why? Well, at both the conference and in the YouTube video, she cited Tesla’s advancements in robotaxis and robotics — which are “becoming a bigger part of the [company’s] story” — as well as AI and energy storage.
She said the company will want to shift the narrative to its June 12 robotaxi launch, which could help the company reclaim a top spot in the auto industry as its market share has slipped amid growing EV competition and “because of all the drama.”
And despite the president saying he has “no intention” of speaking with Musk, Wood thinks the Tesla CEO can get the company back on track. Musk, she said, “works really well under pressure” — and “he creates a lot of that chaos and pressure himself.”
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